Upside down in house…what options do I have?
by Mortgage Rates on Thursday, November 4th, 2010 | 4 Comments
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Around 2012-13 many are speculating that homes will come back to the prices they were in 2007. My advice is that if you can hold out to then, do so.
You can’t foreclose and rent the house, it doesn’t belong to you anymore.
First of all, don’t sell for a loss, that’s just silly. Hold on for the five years before you do anything rash. The situation should recover by the end of 2010 when it comes to housing, absolutely no reason or incentive to sell now (if you even could — some houses sit on the market for years!).
Unless you have lost your job and your ability to pay, you sit tight and make your payments.
When you did the original financing, you were well aware of the ARM’s ability to reset and still signed. The lender was supposed to take your ability to pay at any ARM level into account when approving you for the loan.
Remember, you borrowed money, not a house. You owe money back regardless of the value of the house.
I’m not an attorney, but have been a Realtor for 30 plus years. Your situation is not unusual in today’s market. It looks like you are about $70,000 upside down. That’s about 20%. If you can hang in there for a year or so, do it. The housing market will come back and homes will again appreciate. Only consider foreclosure as a last resort. First, your mortgage (probably) contains a deficiency balance provision. That means if the lender forecloses and sells the home for less that you owe, they can obtain a deficiency judgment against you for the difference. Plus, it’s a major credit hit. There are two other options; short sale and deed in lieu of foreclosure. In a short sale the property is sold for less than you owe (with your lenders approval) and with a deed in lieu of forclosure, you voluntarily deed the property to the lender, again, with the lenders approval. In most cases there is no deficiency judgment with the latter two. Credit hit not as bad as a foreclosure. Consult a real estate attorney.
Realtor.Sailor